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World's Largest Bitcoin Exchange Stops Some Anonymous Operations

Anonymity, one of Bitcoin's supposed biggest advantages over regular currencies, is all but gone on Mt. Gox, the world's largest Bitcoin exchange and trading website.

The japanese-based Mt.Gox announced on Thursday that users who want to exchange currencies into Bitcoin will need to have a verified account, providing a photo ID and a document proving his or her legal residence.

"The Bitcoin market continues to evolve, as do regulations and conditions of compliance for Mt. Gox to continue bringing secure services to our customers," read Mt. Gox's press release announcing the change. "It is our responsibility to provide a trusted and legal exchange, and that includes making sure that we are operating within strict anti-money laundering rules and preventing other malicious activity."

The change comes just two days after the feds shut down Liberty Reserve, a largely unregulated online payment system accused of being a money-laundering "PayPal for criminals."

Mt. Gox, which controls the vast majority of Bitcoin-Dollars exchanges, specified in its announcement that the change only applies to users who want to make withdrawals and deposits in fiat currencies (Dollars, Euros, etc.), but the verification requirements don't apply to deposits or withdrawals in Bitcoin.

However, this change might be seen as the beginning of the end for Bitcoin and anonymity.

The virtual currency attracts users who want to remain anonymous while making payments online, becoming the go-to payment system on a virtual black-market Silk Road. However, Bitcoin's anonymity features are often misunderstood. In fact, by its own nature, every transaction in Bitcoin is traceable, even years after it's done. But many Bitcoin exchange services like Mt. Gox or U.S. based CoinLab and Coinbase didn't require any identity verification when opening an account.

It's unclear why Mt. Gox decided to enact this dramatic change — the press release doesn't offer details about the decision-making process. Mashable attempted to contact Mt. Gox for further comment, and we will update the story as soon as we have more information.

The move is not, however, surprising. Mt. Gox chief executive Mark Karpeles told Forbes earlier this year that "if you try to enforce Bitcoin as an anonymous currency, it’s only going to bring more issues."

"I believe Bitcoin can be anonymous. But it’s too early to go this way. Government entities aren't ready, and we're working with banks that want everything to be done correctly," he told Forbes reporter Andy Greenberg.

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